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What Are The ‘10 Ways to Evaluate a Market’?

Source | personalmba.com | Caterina Fake

The 10 Ways to Evaluate a Market is a checklist that’s helpful in identifying the overall attractiveness of a new market: urgency, market size, pricing potential, cost of customer acquisition, cost of value delivery, uniqueness of offer, speed to market, up-front investment, up-sell potential, and evergreen potential.

Josh Kaufman Explains The ‘10 Ways to Evaluate a Market’

If you’re thinking of starting a new business or expanding an existing business into a new market, it pays to do some research before you leap.

The 10 Ways to Evaluate a Market provide a back-of-the-napkin method you can use to identify the attractiveness of any potential market. Rate each of the 10 factors below on a scale of 0 to 10, where zero is extremely unattractive and 10 is extremely attractive. When in doubt, be conservative in your estimate:

  1. Urgency — how badly do people want or need this right now? (Renting an old movie is typically low urgency; seeing a new picture on opening night is high urgency, since it only happens once.)
  2. Market Size — How many people are actively purchasing things like this? (The market for underwater basket weaving courses is very small; the market for cancer cures is massive.)
  3. Pricing Potential — what is the highest average price a purchaser would be willing to spend for a solution? (Lollipops sell for $0.05; aircraft carriers sell for billions.)
  4. Cost of Customer Acquisition — how easy is it to acquire a new customer? On average, how much will it cost to generate a sale, both in money and effort? (Restaurants built on interstate highways spend little to bring in new customers. Government contractors can spend millions landing procurement deals.)

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